OnLive denies reports that it will lay off entire staff soon -- Updated

Two reports came out today that are alleging that OnLive may be preparing to fire their entire staff. The reports come from tech siteMashable, and InXile Entertainment'sBrian Fargowho both cited insiders at OnLive telling them bad things were afoot at the cloud gaming company.

The confusing part is that OnLive has issued clear denials of these claims so far. However, given that the company might be in its death throes it's hard to completely trust what they say over independent sources. Similar to the 38 Studios debacle, companies often don't like to portray any weakness until the very moment of death in case a last minute investor can be persuaded to save the day.

OnLive offered a clear, "of course not" answer when asked directly about whether the company was closing. And others at OnLive have been a little more reserved, saying that they couldn't comment, but the OnLive service won't be shut down.

All of this leaves the story still very much up in the air, and we don't yet have any idea what the resolution will be. Is somebody at OnLive trolling these journalists? Is this a weird publicity stunt? Or is OnLive very much in financial trouble? We'll likely find out very soon.

UPDATE: Kotaku is reporting that they have new sources confirming that there was a meeting with OnLive's CEO this morning in which he informed the staff that OnLive was filing for bankruptcy, and that they were no longer employed by the company.

Eyewitness reporting also confirms that several employees have left OnLive's offices with moving boxes.